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Pennsylvania Businessman Gets Federal Prison in Copier Fraud
Plenty of people vouched for Erie businessman Frederick Zurn’s religious faith before he was sentenced on Tuesday to four years and six months in federal prison for a multimillion-dollar fraud.
Zurn’s two sons, his brother, a Roman Catholic priest and several business associates described Zurn as committed to his church and community.
"Fred can do a lot more good outside the prison than inside the prison," the Rev. Michael DeMartinis told U.S. District Judge Sean J. McLaughlin.
"There is a difference between evil criminals and my dad," Michael Zurn said.
A tearful Frederick Zurn said he was "deeply remorseful" and had failed in this case to live up to is personal motto: "to enhance other people’s lives."
The prosecutor, Assistant U.S. Attorney Christian Trabold, said he would not challenge Zurn’s achievements as a father, husband or philanthropist.
However, Trabold said, "your character is more than how you treat your family."
He said Zurn carried out a scheme in which his Erie Copy Products Inc. defrauded lenders and customers of $2.5 million to $7 million between July 2004 and May 2011 and failed to remit payroll taxes between 2008 and 2011.
Some of the victims, Trabold said, were churches, such as the Roman Catholic Our Lady of Peace in Millcreek Township, which lost $23,000.
Trabold said customers of Erie Copy Products paid for leases for copiers they never received or that were broken, older or less expensive than the equipment they thought they were leasing.
Other victims, Trabold said, included Erie Day School, St. John the Evangelist Catholic Church in Girard, which called its dealings with Erie Copy Products "a financial nightmare" and the Roman Catholic St. Mary Parish in Elyria, Ohio, which said it felt "cheated."
Zurn "was leading a double life," Trabold said.
At the same time he was a loving family man, Trabold said, Zurn was "unquestionably operating a business that was ripping people off on a regular basis."
McLaughlin said he weighed all aspects of Zurn’s life in giving him four years and six months, which was within the recommended guideline range of four years and three months to five years and three months.
McLaughlin said the support of Zurn’s family and friends — about 20 of whom were in court — helped Zurn’s cause, but that the fraud was too extensive to warrant less time.
Erie Copy Products "functioned as criminal enterprise rather than a legitimate business for more than a decade," McLaughlin said.
He gave Zurn five years of supervised release, ordered him to pay $278,324 to the Internal Revenue Service and to forfeit more than $11,000 he made from a household sale, at his home on St. Mary Drive, in Millcreek, of items he originally bought with money from the fraud.
McLaughlin said he would order more restitution after Trabold and Zurn’s lawyer, John Mizner, agree on the amount. Trabold wants $1.4 million for 25 victims.
Zurn, who had been president and chief executive of the now-defunct Erie Copy Products Inc., 2820 W. 12th St., pleaded guilty in July to all of the charges against him — one count of conspiracy to commit wire fraud and 10 counts of willful failure to pay payroll taxes, all felonies.
Zurn’s co-defendant, Mary Beth Nagorski, 51, had been the vice president at Erie Copy Products. She pleaded guilty to one count of conspiracy to commit wire fraud and will be sentenced Feb. 28.
Zurn and Nagorski admitted to forging documents and using other deceit to execute the fraud, which was built around lease payments for copiers and other equipment.
Finance companies would pay Erie Copy Products the full lease amounts up front, and the finance companies would collect payments from the customers who leased the equipment.
The government accused Zurn and Nagorski of getting lease payments for substandard or nonexistent copiers. Customers tipped off the Secret Service and IRS, which filed charges in May.
By Tuesday, Zurn had lost his house, his career, his freedom and his reputation.
"It is disingenuous to say you are a man of faith," Trabold said, "when you are ripping people off."
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